Tuesday’s Market Snapshot: Here’s What You Need To Know Right Now1h

Tuesday’s Market Snapshot: Here’s What You Need To Know Right Now1h

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US stocks climbed as the formal preparation of President-elect Joe Biden’s transition to the White House started and recent positive Covid-19 vaccine progress pushed investors into riskier assets.

The Dow Jones Industrial Average and the S&P 500 Index both advanced 1.4%. The tech-heavy Nasdaq Composite Index increased 1%.

In some disappointing earnings-related news, Hormel Foods fell 4.1% as the packaged foods company lagged analysts’ expectations for the fourth quarter of FY20 (ended Oct. 25) because of lower sales in its domestic foodservice channel due to the pandemic. The company’s 4Q FY20 sales fell 3.3% year-over-year to $2.42 billion while EPS was down 8.5% to $0.43. Analysts expected sales of $2.59 billion and EPS of $0.44. U.S. retail net sales and U.S. deli net sales grew 7% and 1%, respectively, while U.S. foodservice net sales dropped 23% in 4Q. Ahead of the results, the company announced a 5.4% increase in its annual dividend to $0.98.

Urban Outfitters dropped more than 5% even as its 3Q results blew past analysts’ expectations despite the impact of COVID-19 on retailers. The company reported EPS of $0.78, surpassing the $0.44 consensus estimate, with it also beat on the top line thanks to gains in the Urban Outfitters and Free People brands. That said, weakness in the Anthropologie Group and Menus & Venues brands weighed on sales.

Meanwhile, Fulgent Genetics’ lifted 2020 outlook was overshadowed by BTIG downgrading the stock’s rating to Hold from Buy. Shares plunged 12% as BTIG analyst Sung Ji Nam said the rating change was due to the stock’s high valuation and “limited visibility” related to the long-term durability of the company’s COVID-19 testing business. The genetic testing service provider said it now expects 2020 revenue to generate at least $300 million, up 28% from the previous guidance. Analysts expect 2020 revenue to yield $237.4 million.

Performing better today, Ambarella surged more than 12% thanks to the chip maker’s better-than-expected 3Q results and upbeat revenue outlook for 4Q. The company’s 3Q revenues fell 17.4% year-over-year to $56.1 million but surpassed analysts’ expectations of $55 million. Meanwhile, its adjusted EPS of $0.09 also came ahead of the Street’s estimates of $0.05. EPS declined by 71.9% year-over-year. For 4Q, Ambarella projects revenues of between $56 million and $60 million, compared to the Wall Street average forecast of $51.2 million.

Dollar Tree popped 11% after the discount store operator earned $1.39 a share, in the third quarter, up from $1.08 a share, in the year-earlier period. Analysts on average were forecasting a profit of $1.15 per share. Sales increased to $6.18 billion from $5.75 billion year-on-year, exceeding the Street consensus of $6.13 billion. Same-store sales jumped 5.1% compared to analysts’ estimates for growth of 4.7%. “Dollar Tree delivered its strongest same-store sales performance in the past ten quarters, along with a 50 basis point improvement in operating margin,” stated Dollar Tree CEO Mike Witynski.

Now turning to deal news, McCormick rose more than 2% after announcing an agreement to snap up hot-sauce maker Cholula, in an $800 million all-cash deal, as the spices and condiments maker seeks to capitalize on the growing demand for flavorful eating. The transaction is expected to be completed by the end of 2020 and will be financed with a combination of cash on hand and commercial paper. Upon closing of the deal, the company expects to incur transaction costs that will impact earnings per share. McCormick projects the transaction to be accretive to adjusted earnings per share in 2021.

BlackRock has reached an agreement to buy Aperio from private equity firm Golden Gate Capital and Aperio employees in an all-cash deal worth $1.05 billion. According to BlackRock, the tie-up with Aperio, a company that provides personalized index equity solutions and customizes tax-optimized index equity separately managed accounts (SMAs) and boasts $36 billion of assets under management, could increase its SMAs by about 30% to over $160 billion. “The wealth manager’s portfolio of the future will be powered by the twin engines of better after-tax performance and hyper-personalization. BlackRock and Aperio, working together, will bring unmatched capabilities to meet these objectives,” head of BlackRock’s U.S. Wealth Advisory business, Martin Small, commented. Shares added 2.3%.

In pharmaceutical stock news, Novartis said it will initiate a share buyback plan of up to $2.5 billion, which will start immediately and is expected to last into the first half of 2021. The Swiss pharmaceutical company made the announcement ahead of today’s annual “Meet Novartis Management” virtual meeting with investors and industry analysts. As part of a business update, Novartis said it seeks to drive margin expansion and is on track to reach its $2 billion target in cost savings by year-end across its technical operations and business services. Shares advanced 1.1%.

Credit: TipRanks

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